Canadians expect higher inflation as Bank of Canada weighs hikes
By Laura Osman and Erik Hertzberg
(Bloomberg) — A majority of Canadians expect inflation to increase over the next 12 months, a potentially worrying sign for the Bank of Canada as it weighs interest-rate hikes.
A Nanos Research Group poll for Bloomberg News shows 54% of Canadians think the yearly change in the consumer price index will be higher than the current 3% by this time next year.
That compares with about a third who said inflation would be about the same over that time. Just 7% said inflation would be lower.
The data may add to central bankers’ worries as they assess whether consumer inflation expectations are detaching from the bank’s 2% target.
The results also speak to an “anxious, dour mood” among Canadians, said Nik Nanos, the polling firm’s founder and chief data scientist.
“They realize that Canada only really has so much control over a lot of these big issues,” Nanos said in an interview.
The longer that inflation expectations remain elevated, the greater the risk that Canadians start to build above-target inflation into their behaviour, such as asking for larger wage increases or bringing forward purchases, potentially adding to price pressures.
Last month, Governor Tiff Macklem warned that if policymakers are slow to respond to sustained high inflation, the bank may have to hike even higher and at a faster rate.
Raising borrowing costs unnecessarily, however, could weaken economic growth during a period of uncertainty, he said.
Inflation in Canada started to rise with gasoline prices in February, as the war in Iran set off a global oil shock that drove up energy costs. The headline rate has held near 3% — the cap of the bank’s control range for inflation — for months.
Officials aren’t sure whether those high gas prices are feeding into broader price pressures in goods and services in the rest of Canada’s economy, and are debating whether the current policy rate of 2.25% is sufficient to keep price pressures in check.
Higher borrowing costs would restrain demand and weigh on consumption, helping to reduce the risk that higher energy prices feed into broader inflationary pressures.
Traders in overnight swaps put the odds of the bank raising rates at its next meeting on Oct. 28 at about a third. They are expecting more than 100 basis points of hikes over the next 12 months.
The Bank of Canada will also release business outlook and consumer surveys on Oct. 19 that will offer further insights into Canadians’ inflation expectations.
Polling results were generally consistent across ages, genders and regions.
The survey of 1,057 Canadians was conducted between Sept. 27 and Sept. 29 by telephone and online, and is considered accurate within three percentage points, 19 times out of 20.
–With assistance from Mario Baker Ramirez.
©2026 Bloomberg L.P.
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Last modified: October 6, 2026
